Highlights

Activision Blizzard Reports Q1 2021 Earnings (link)

• ATVI reported increased YoY revenue during FQ1 2021, and strong growth in its core franchises

• • Reported FQ1 2021 revenue ex-deferrals of $2,066M representing a 36% increase YoY, and exceeding prior revenue outlook of $1,750M
  • FQ1 2021 digital net revenue increased 39% YoY to $2,006M, representing 88% of total net revenue
  • The previously announced cash dividend of $0.47 per common share, is payable on May 6th, 2021 (representing a 15% increase from 2020)

• ATVI Business Highlights and Recent Events

• • ATVI indicated strong investments in growth with the intention to hire more than 2,000 developers over the next two years, and triple the size of certain franchise teams by the end of 2022 as compared to 2019
  • Call of Duty provides a template that ATVI will apply to other proven franchises in attempt to grow its audiences to 1 billion players
  • The Company is seeing a business shift from a seasonal focus with a holiday emphasis to an always-on business model with far less seasonality due to Live Operations
  • From an M&A perspective, ATVI is generally looking for large established franchises or technologies that have the potential for scale, strong leadership teams with a track record of profitability, and an attractive valuation to satisfy its return threshold
  • The Company indicated that it would like all of its franchises on Mobile, whether it be reimaginations of an IP on Mobile or more similar to an existing PC/Console experience

Skillz Reports Q1 2021 Earnings (link)

• Skillz reported record revenue, marking 21 consecutive quarters of revenue growth, and raised FY 2021 guidance from $366M to $375M

• • Reported FQ1 2021 revenue of $84M representing a 92% increase YoY, and exceeding consensus of $79M
  • Reported FQ1 2021 GMV of $567M, up 85% YoY and versus consensus of $530M
  • Reported FQ1 2021 Gross Profit of $79M, up 95% YoY and versus consensus of $76M
  • Reported FQ1 2021 EBITDA of -$31M versus consensus of -$34M

• Key Performance Indicators

• • Reported FQ1 2021 MAUs of 2.7M, up 13% QoQ
  • Reported FQ1 2021 ARPU of $10.35, up 10% QoQ
  • Reported FQ1 2021 pMAUs of 0.467M, up 19% QoQ
  • Reported FQ1 2021 ARPPU of $60, up 3% QoQ

• Business Highlights & Recent Events

• • Business Highlights

• • • Expanded Android footprint, growing revenue from Android users 2x faster than iOS
    • Announced multi-year agreement with the NFL to allow competing developers the opportunity to develop an NFL-themed mobile game
    • Skillz is on track to launch in India by the end of 2021 and is investing in localizing the product, including the payment systems
    • The Company plans to expand into other international markets in 2022 and beyond
    • Tetris Clash is currently in soft launch on the platform

Zynga Reports Q1 2021 Earnings (link)

• Zynga reported record FQ1 results including highest quarterly revenue and bookings as well as DAUs and MAUs, driven by their Live Services Portfolio

• • Reported FQ1 2021 bookings of $720M, representing a 69.5% increase YoY, and exceeding prior bookings outlook of $680M
  • Reported FQ1 2021 international revenue of $268M, representing a 67% increase YoY, and international bookings of $278M, representing a 59% increase YoY
  • Reported an all-time best advertising revenue of $123M, representing a 108% increase YoY

• Portfolio Performance & KPIs

• • Record revenue and bookings driven by an all-time best quarter for Zynga’s Social Slots portfolio, in addition to its highest Q1 performance by Empires & Puzzles, Words With Friends, CSR2, and its Casual Cards portfolio
  • Record average Mobile Daily Active Users (DAUs) of 38M (up 85% YoY)
  • Record average Mobile Monthly Active Users (MAUs) of 164M (up 139% YoY)
  • Mobile Average Bookings Per Mobile DAU (ABPU) was $0.202 for the period, (down 6% YoY)
  • Increases in DAUs and MAUs were primarily driven by recent additions of Toon Blast, Toy Blast, and Rollic’s hyper-casual portfolio
  • Bookings composition: Forever Franchises (66%), Other (19%), Social Slots & Casual Cards (15%)

• Growth Highlights

• • Recently launched Puzzle Combat with additional new launches planned in 2021 and beyond
  • Zynga expects the release of FarmVille 3 and Star Wars: Hunters worldwide by the end of 2021
  • Cross-platform play development expanded with the announcement of Star Wars: Hunters and acquisition of Echtra
  • Record international revenue and bookings with Asia as a key contributor

• Zynga pays Small Giant $240M for 6.7% in second performance earn-out (link)

Twitch mobile app hits 22M installs in Q1 2021, up 62% YoY (link)

• US live streaming platform Twitch has seen huge growth via its mobile app, generating over 22M downloads in Q1 2021
• In 2020, the Twitch app grew by 96% YoY to 17.6M

Newzoo: Global game market 2021 outlook (link)

• The game industry had a booming year during 2020’s pandemic, and Newzoo believes it will be hard to beat last year’s numbers because of a confluence of forces, such as the ongoing semiconductor chip shortage and Apple’s push to prioritize privacy over targeted advertising
• Newzoo forecasts the PC game market will decline 2.8% YoY to $35.9B in 2021. Of that, Newzoo forecasts $33.3B will be spent on downloaded/boxed games and $2.6B on browser games
• For consoles, Newzoo forecasts the market will decline 8.9% to $49.2B as the after-effects of COVID-19 shape the console market this year

Nintendo Switch hits 84.59M units sold, with 28.8M sold this past year (link)

• Nintendo reported its year-end financial results today and said the Switch sold more than 28.8M consoles, up 37.1% in the past 12 months that ended March 31
• Lifetime sales of the Switch are now at 84.59M consoles, with 587.12M copies of software
• That means it has outdistanced the Nintendo 3DS, which sold 75.94M systems and 386.48M copies of software
• Nintendo forecasted that it could sell another 26.5M Switch consoles in the next year ending March 31, 2022

My.Games grew Q1 FY21 revenues 42% to $147M (link)

• Russian PC and mobile games company My.Games has published its financial results for the first quarter of 2021
• The Company witnessed strong growth up 42% YoY, reaching $147M in revenue
• Grand Hotel Mania, Rush Royale, Zero City, War Robots, and Conqueror’s Blade led the revenue growth in this quarter, with around 98% of revenues coming from MMO games
• The Company had 22.7M monthly active users: 4.8% are paying customers

Krafton announces Battlegrounds Mobile India (link)

• South Korean game maker Krafton has announced Battlegrounds Mobile India, the rebranded version of PUBG Mobile India
• With privacy and data protection being a top priority for the Indian government, Krafton will be working with various partners to ensure data protection and security, at each stage
• In the initial phase Battlegrounds Mobile will offer a series of local events and have its regional esports ecosystem with tournaments and leagues

M&A and Capital Raising

PlayStation invests in Discord and plans integration with PSN in 2022 (link)

• In a blog post, Sony Interactive Entertainment head Jim Ryan explained that this connection will enable some form of communication between users on PSN and the Discord app on PC and mobile
• As part of this deal, Sony is also making an investment in Discord, but the companies did not disclose the amount of the investment
• Discord has more than 140M people using it each month, and is the go-to solution for gamers looking to connect with one another

EA acquires Super Mega Baseball developer Metalhead (link)

• EA Sports has hits with the Madden and FIFA franchises, but it hasn’t released an MLB game since its MVP Baseball series ended in 2005

• The Super Mega Baseball series has received praise from fans and critics, but it does not have an MLB license, so it can’t use MLB teams or players

Zynga buys mobile ad and monetization firm Chartboost for $250M (link)

• With this transaction, Zynga is reaching outside of its usual food chain to another part of the industry — mobile game marketing, advertising, and monetization
• Chartboost is an advertising platform that has been around since 2011, and it is a big mobile programmatic advertising and monetization platform
• It reaches more than 700M monthly users and 90B monthly advertising auctions

Metacore secures $179.9M in credit from Supercell for casual games (link)

• The investment shows what Helsinki-based Supercell is willing to do with the cash it generates from mobile gaming hits like Clash of Clans, Clash Royale, Hay Day, and Brawl Stars
• Since releasing its first game (Merge Mansion) in late 2020, Metacore’s annual revenue run rate has reached $54M, putting the Company on track to become one of the fastest-growing game studios in Europe
• Merge Mansion is a puzzle game with more than 800,000 daily players. The new funding will help boost Merge Mansion’s global operations and strengthen Metacore’s core team

Genies raises $65M to boost avatars for virtual identity and wearable digital goods (link)

• Genies wants to become the virtual identity for people to express themselves in the digital world. It started with celebrities to capture moments for events such as album releases, song drops, and guest appearances, and it saw greater use over the pandemic
• Bond led the round, with participation from NEA, Breyer Capital, Tull Investment Group, NetEase, Dapper Labs, and Coinbase Ventures
• The investment proceeds will be used to invest in the technology behind the Genie avatar system and to continue to build out the digital goods marketplace on Dapper Lab’s Flow platform

Ace Games raises $7M in seed funding (link)

• The round was led by local VC Actera Group, and included other independent investors
• Founded in September 2020 by a former Peak Games co-founder, Hakan Bas, Ace Games currently runs two studios

Carry1st raises $6M to publish mobile games in Africa (link)

• Carry1st has raised $6M in funding for its mobile game publishing platform targeted at the untapped potential of the African market
• Africa has around 1.1B members of the Millennial and Generation Z groups, who are big technology adopters
• Carry1st says it provides a full publishing solution, handling distribution, localization, user acquisition, marketing, customer experience, and monetization for its partners

Arcturus raises $5M for holographic imaging in games and entertainment (link)

• Arcturus today announced it has raised $5M in funding for tools that enable developers to create realistic holographic characters based on recorded video
• Bitkraft Ventures led the round, with participation from leaders in the sports, telecom, gaming, and music space

BigBrain raises $4.5M and launches trivia game with real-money prizes (link)

• BigBrain is launching its BigBrain trivia game where you can win real-money prizes. The Company has raised $4.5M to build it
• The iOS game will let people win up to thousands of dollars in a match, depending on how many people are playing, and each player will pay an entry fee of as little as $1
• The seed round financing for Brooklyn, New York-based Big Brain came from FirstRound Capital, Box Group, Ludlow Ventures, Golden Ventures, and others

Others

Riot Games will launch Wild Rift esports tournament in late 2021 (link)

• The Company hopes to apply the lessons of a decade of League of Legends esports to the mobile game
• Riot Games wants to build a similar community for Wild Rift
• League of Legends: Wild Rift is a 5-on-5 multiplayer online battle arena (MOBA) experience of League of Legends, developed for console and mobile by Riot Games

World of Warcraft: Burning Crusade Classic prepares for June 1 launch (link)

• Blizzard Entertainment announced that World of Warcraft: Burning Crusade Classic will launch for PC on June 1
• Burning Crusade was the first expansion for Blizzard’s hit MMO. It debuted in 2007

Gaming Public Multiples